30th September 2015
The Bank of England Governor has warned that climate change poses a huge threat to the global economy.
Speaking at Lloyds of London yesterday, Mark Carney talked of the accumulation of severe weather events and warned that such catastrophes will only get more numerous and more frequent.
He said: “There is a growing international consensus that climate change is unequivocal. “
Carney highlighted many of the changes unprecedented changes in the world since the 1950s.
He said: “In the Northern Hemisphere the last 30 years have been the warmest since Anglo-Saxon times; indeed, eight of the ten warmest years on record in the UK have occurred since 2002;
“Atmospheric concentrations of greenhouse gases are at levels not seen in 800,000 years; and
“The rate of sea level rise is quicker now than at any time over the last 2 millennia. “
He also made a clear case for climate change being the result of human actions.
“While natural fluctuations may mask it temporarily, the underlying human-induced warming trend of two-tenths of a degree per decade has continued unabated since the 1970s,” he said.
Carney praised insurers for being “the most determined advocates for tackling it sooner rather than later” as they are already “dealing with the reality” of climate change.
“Since the 1980s the number of registered weather-related loss events has tripled; and inflation-adjusted insurance losses from these events have increased from an annual average of around $10bn in the 1980s to around $50bn over the past decade,” he said.
Carney warned that these current challenges “pale in significance compared with what might come” and spoke of the potential global impact on property, migration and political stability, as well as food and water security.
However, he said that because the worst tragedies of climate change are likely to be felt by future generations they remain beyond the political and economic cycles of today’s powers and there is not enough incentive for action.
“Once climate change becomes a defining issue for financial stability, it may already be too late,” he said.
Carney highlighted UK investors’ exposure to fossil fuels.
He said: “19% of FTSE 100 companies are in natural resource and extraction sectors; and a further 11% by value are in power utilities, chemicals, construction and industrial goods sectors. Globally, these two tiers of companies between them account for around one third of equity and fixed income assets.”
He called for the markets, financial regulators and governments to work together to manage the transition to greener technologies and take early action to prevent worsening climate change.